News for the Week of January 17-20, 2017

by David Abuaf, CFA

Investment Manager, RJFS

 

 

Government / Political / non-Economic

 

  1. President Donald J. Trump and Vice President Michael R. Pence were sworn in to office on the west front of the United States Capitol on Friday 
  2. Health and Human Services pick Tom Price told senators he would fight government regulations he said burden doctors and patients
    • He did have quite a testy exchange with Bernie, rather fun to watch
  3. Several West African nations lined up troops on Gambia’s borders as its president refused to step down
  4. Islamic State has ramped up sales of oil and gas to the regime of Syria’s Assad

 

 

General Markets / Economic

    

  1. China issued a full-throated defense of international trade and economic integration in a speech at the Davos forum
  2. Some business and agricultural groups are lobbying Trump transition officials to salvage a Pacific trade deal
  3. The Consumer Price index poked above 2%, a sign of reduced slack in the economy that could support additional Fed moves to raise rates
  4. OPEC said its oil output fell in December after members agreed to reduce it
    • This is actually less stupid than it sounds. Just because the members agree to do something doesn’t mean they always will! Iran and Venezuela – due to political strife and economic conditions – are typically the nations who don’t care what is agreed and do whatever they please
  5. The Fed delivered remarks on the US economy that suggested it is sticking to its plan of raising rates cautiously and gradually in the months ahead
  6. China reported 6.7% growth in its economy in 2016 with its strong push for easy credit and state spending
    • The easy credit has been around a while and could hurt China soon unless they do something!

 

 

Company News

 

  1. The FTC sued Qualcomm, saying the firm engaged in unlawful tactics to maintain a monopoly on a type of chip used in cellphones
  2. BAT agreed to take full control of Reynolds in a $49.4B deal that marks renewed interest in the US tobacco market
  3. Italy’s Luxottica is merging with French lens maker Essilor in a deal that would give the combined firm 27% of the eyewear market
    • Interesting tidbit, if you own glasses, odds are extremely high that your pair are made by Luxottica. Luxottica is the firm that handles all the manufacturing and outsourcing of frames 
  4. IBM recorded its 19th straight quarter of falling revenue, as it struggles to offset declines in older businesses with sales in younger ones!

 

 

Interesting News

 

  1. Our favorite swindler, Bernie Madoff, has reportedly taken hold of the hot chocolate market in prison by buying up all the Swiss Miss hot cocoa packets!
  2. A man suffered burns after trying to set himself on fire outside Trump Hotel. I’m sure he was…trying to do something, but I neither care nor know what it was. I wonder if he expected to receive any burns – or in fact live – prior to setting himself on fire?

 

 

    

Commentary for the Week of 01/17/2017 – 01/20/2017

 

by David Abuaf, CFA

Investment Manager, RJFS

 

Chart from Barrons

 

 

Another tepid week in the markets with little movement amongst any index. The coming few weeks are likely to be more a sense of “has Trump intelligently described his plan – in detail?” it isn’t that we don’t know what his broad outline is – but investors are still trying to figure out what exactly will change and what the impact will be. If the market gets it wrong, then Jeff Rottinghaus of T. Rowe Price says “the market is susceptible to a correction!” 

 

Over the past few weeks the major indexes have been quiet, but we might have gotten a glimpse of the future last week as individual stocks reacted to the confirmation hearings from Trump’s nominees; Wilbur Ross commenting that we need more tariff activity and Steve Mnuchin saying he didn’t support a plan to recapitalize the government backed enterprises and make them independent.

 

All that could take stocks on a roller-coaster ride during the first 100 days of Trump’s presidency. Brian Belski of BMO Capital Markets believes the Donald to be aware of recent history – how easy it is for a united government to become divided again at the mid-term elections – and will try to get a lot done quickly (one need only look at Trump’s list of executive orders for this week!). “That’s setting the stage for surprises in both directions, but the market is making a big mistake if it bets on gridlock,” according to Belski. Long story short, change is coming, whether the market likes it or not!

 

 

 

 

 

All opinions presented are those of David Abuaf, and not of Raymond James or Forman Investment Services. 

 

This information is not a complete description of the securities, markets, or developments discussed and has been obtained from sources considered to be reliable, but Raymond James does not guarantee that the foregoing material is accurate or complete. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation.  This information is not intended as a solicitation or an offer to buy or sell any security referred to herein.

 

The S&P 500 is an unmanaged index of 500 widely held stocks that is generally considered representative of the U.S. stock market. Index performance does not include transaction costs or other fees, which will affect actual investment performance.  Individual investor’s results will vary. Commodities’ investing is generally considered speculative because of the significant potential for investment loss.  Their markets are likely to be volatile and there may be sharp price fluctuations even during periods when prices overall are rising.  Inclusion of these indexes is for illustrative purposes only. Keep in mind that individuals cannot invest directly in any index. Individual investor's results will vary. Past performance does not guarantee future results.

 

 To opt out of receiving future emails from us, please reply to this email with the word “Unsubscribe” in the subject line. 

 

A17-004276